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Signs of a slowing U.S. economy caused panic among investors on Monday, turning last week’s sell-off into a global rout. The declines followed a U.S. jobs report on Friday that showed significantly slower hiring, with unemployment rising to its highest level in nearly three years. This deepened fears of a potential recession and concerns that the Federal Reserve may have delayed cutting interest rates for too long.
Key Points:
- U.S. Markets:
- S&P 500: Dropped more than 4%
- Nasdaq: Plunged nearly 6%
- Investor Sentiment:
- Some saw the sell-off as a sign of recession risk.
- Others attributed it to a pullback from overextended bets on tech stocks and AI.
Global Market Impact:
- Asian Markets:
- Japan’s Nikkei 225: Dropped 12.4%, the largest one-day point decline, surpassing the Black Monday crash of 1987.
- South Korea’s Kospi: Fell more than 10% at one point.
- Markets in Taiwan, Singapore, Australia, Hong Kong, and mainland China also declined.
- India’s stock market: Traded more than 2% lower.
- European Markets:
- Pan-European Stoxx Index: Fell about 3%, with every major market recording declines.
Economic Indicators:
- Goldman Sachs Forecast:
- Based on the weak jobs report, the investment bank now expects the Fed to cut rates at its next three meetings (September, November, and December).
- Raised the probability of a U.S. recession in the next 12 months to 25%, up from 15%.
The market turmoil underscores the heightened anxiety over the economic outlook, driven by disappointing labor market data and concerns about the Federal Reserve’s policy stance. Investors are seeking refuge from the broad-based slump, reflecting a sharp reversal from the optimism that had propelled major stock markets to new heights over the past year.